Proposed Rule Would Require Faster Payments to Subcontractors

A proposed rule publicized in the Federal Register on December 19, 2012, would add a new clause to the Federal Acquisition Regulation to require accelerated payments to small business subcontractors. The rule would implement the temporary policy provided by Office of Management and Budget (OMB) Policy Memorandum M-12-16. The proposed rule would provide Accelerated Payments to Small Business Subcontractors, requiring the prime contractor, upon receipt of accelerated payments from the government (emphasis added), to make accelerated payments to small business subcontractors. This would need to be done “to the maximum extent practicable” after receipt of a proper invoice and all proper documentation from small business subcontractors.

The clause would be inserted into all new solicitations issued after the effective date of the final rule and resulting contracts, including solicitations and contracts for the acquisition of commercial items(emphasis added).

So question to you: Has anyone already had their Contracting Officer require them to make accelerated payments to their small business subcontractors? Or do you by way of your regular business attempt to make timely payments to your small business subs? Please let us know in the comment section below. We are interested in how effective the OMB’s Policy has been to date and whether the rule will have a large effect on your current business practices.